Huntington National Bank 2005 Annual Report Download - page 58

MANAGEMENT’S DISCUSSION AND ANALYSIS HUNTINGTON BANCSHARES INCORPORATED
At September 30, 2004, we adopted a new policy of placing home equity loans and lines on non-accrual status when they exceed
180 days past due. Such loans were previously classified as accruing loans and leases past due 90 days or more. This policy
change conforms the home equity loans and lines classification to that of other consumer loans secured by residential real estate.
Total NPAs were $117.2 million at December 31, 2005, up $8.6 million, or 8%, from $108.6 million at December 31, 2004, which
was up $21.2 million, or 24%, from the end of 2003. Expressed as a percent of total loans and leases and other real estate, the
year-end positions for 2005, 2004, and 2003 were 0.48%, 0.46%, and 0.41%, respectively. Total non-performing loans and leases
increased throughout 2005, from a historically low point at the end of 2004, to a more normal level at the end of 2005.
All of the increase in 2004 related to the workout of a troubled mezzanine financing relationship. During the 2004 fourth
quarter, OREO reflected $35.7 million for properties related to the workout of $5.9 million of non-performing mezzanine loans
to a real estate partnership as we took ownership of the partnership, which required consolidation of the partnership’s assets and
liabilities including these properties.
Table 13 — Non-Performing Assets and Past Due Loans and Leases
At December 31,
(in thousands of dollars) 2005 2004 2003 2002 2001
Non-accrual loans and leases:
Middle market commercial and industrial $ 28,888 $ 24,179 $33,745 $ 79,691 $143,140
Middle market commercial real estate 15,763 4,582 18,434 19,875 35,848
Small business commercial and industrial and commercial real estate 28,931 14,601 13,607 19,060 29,009
Residential mortgage 17,613 13,545 9,695 9,443 11,836
Home equity 10,720 7,055 — — —
Total non-accrual loans and leases 101,915 63,962 75,481 128,069 219,833
Renegotiated loans —— — — 1,276
Total non-performing loans and leases 101,915 63,962 75,481 128,069 221,109
Other real estate, net:
Residential 14,214 8,762 6,918 7,915 4,915
Commercial(1) 1,026 35,844 4,987 739 1,469
Total other real estate, net 15,240 44,606 11,905 8,654 6,384
Total non-performing assets $117,155 $108,568 $87,386 $136,723 $227,493
Non-performing loans and leases as a % of total loans and leases 0.42% 0.27% 0.36% 0.69% 1.20%
Non-performing assets as a % of total loans and leases and other real estate 0.48 0.46 0.41 0.74 1.23
Accruing loans and leases past due 90 days or more $ 56,138 $ 54,283 $55,913 $ 61,526 $ 76,013
Accruing loans and leases past due 90 days or more as a percent of total loans
and leases 0.23% 0.23% 0.27% 0.33% 0.41%
Total allowances for credit losses (ACL) as % of:
Total loans and leases 1.25 1.29 1.59 1.81 2.00
Non-performing loans and leases 300 476 444 263 167
Non-performing assets 261 280 384 246 162
(1) At December 31, 2004, other real estate owned included $35.7 million of properties that related to the workout of $5.9 million of mezzanine loans. These properties were subject to
$29.8 million of non-recourse debt to another financial institution. Both properties were sold in 2005.
Non-performing asset activity for the five years ended December 31, 2005 was as follows:
Table 14 — Non-Performing Asset Activity Year Ended December 31,
(in thousands of dollars) 2005 2004 2003 2002 2001
Non-performing assets, beginning of year $108,568 $ 87,386 $ 136,723 $ 227,493 $ 105,397
New non-performing assets(1) 171,150 137,359 222,043 260,229 329,882
Returns to accruing status (7,547) (3,795) (16,632) (17,124) (2,767)
Loan and lease losses (38,819) (37,337) (109,905) (152,616) (67,491)
Payments (64,861) (43,319) (83,886) (136,774) (106,889)
Sales(1) (51,336) (31,726) (60,957) (44,485) (30,639)
Non-performing assets, end of year $117,155 $108,568 $ 87,386 $ 136,723 $ 227,493
(1) In 2004, new non-performing assets included $35.7 million of properties that relate to the workout of $5.9 million of mezzanine loans. These properties were subject to $29.8 million of non-
recourse debt to another financial institution. Both properties were sold in 2005.
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